Correlation Between MFC Industrial and Crown Seal
Can any of the company-specific risk be diversified away by investing in both MFC Industrial and Crown Seal at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining MFC Industrial and Crown Seal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MFC Industrial Investment and Crown Seal Public, you can compare the effects of market volatilities on MFC Industrial and Crown Seal and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in MFC Industrial with a short position of Crown Seal. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFC Industrial and Crown Seal.
Diversification Opportunities for MFC Industrial and Crown Seal
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between MFC and Crown is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding MFC Industrial Investment and Crown Seal Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crown Seal Public and MFC Industrial is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on MFC Industrial Investment are associated (or correlated) with Crown Seal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crown Seal Public has no effect on the direction of MFC Industrial i.e., MFC Industrial and Crown Seal go up and down completely randomly.
Pair Corralation between MFC Industrial and Crown Seal
Assuming the 90 days trading horizon MFC Industrial Investment is expected to under-perform the Crown Seal. In addition to that, MFC Industrial is 19.9 times more volatile than Crown Seal Public. It trades about -0.14 of its total potential returns per unit of risk. Crown Seal Public is currently generating about -0.01 per unit of volatility. If you would invest 4,600 in Crown Seal Public on December 1, 2024 and sell it today you would lose (25.00) from holding Crown Seal Public or give up 0.54% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
MFC Industrial Investment vs. Crown Seal Public
Performance |
Timeline |
MFC Industrial Investment |
Crown Seal Public |
MFC Industrial and Crown Seal Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with MFC Industrial and Crown Seal
The main advantage of trading using opposite MFC Industrial and Crown Seal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MFC Industrial position performs unexpectedly, Crown Seal can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Crown Seal will offset losses from the drop in Crown Seal's long position.MFC Industrial vs. MFC Nichada Thani Property | MFC Industrial vs. LH Shopping Centers | MFC Industrial vs. HEMARAJ INDUSTRIAL PROPERTY | MFC Industrial vs. Land and Houses |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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